Back in the old days, AT&T’s manufacturing arm, Western Electric, dominated the domestic landscape for telecommunications equipment, including PBX systems, based on its monopoly status across most of the contiguous U.S. market. But during the past 40 years, AT&T and its descendents Lucent Technologies and Avaya have seen its domestic PBX systems market share tumble from a high of about 90% to its current level of about 22%.
Competition came from a large number of suppliers that were American- or foreign-owned. AT&T’s significant market share decline (an amazing 65%) during the 20-year period from 1970 through 1990 was the direct result of the Open Interconnect era kicked off by the 1968 CarterFone Decision.
At first a number of domestic companies grabbed a sizable percent of AT&T’s installed customer base, but by the time Rolm Systems was acquired by Siemens in 1988, AT&T remained the only American PBX supplier of note. Domestic system suppliers controlled less than half the U.S. market for PBXs at the beginning of the 1990s. Would the foreign invasion and conquest continue or would the cavalry (to borrow a cliche from old Hollywood) come to the rescue?
It would take until the turn of the century when a new market player would start to turn things around and reverse the long term trend of lost market share to foreign-owned PBX system suppliers. In less than 10 years, Cisco Systems has helped U.S. system suppliers regain more than a majority share: almost two thirds of the domestic PBX market, the largest collective domestic supplier market share since the early 1980s. Cisco itself has captured almost one third of the U.S. market in a relatively short time. Three Canadian-based suppliers--Nortel, Mitel Networks, and Aastra Technologies--collectively split about one fourth, while the remaining European and Japanese suppliers collectively have less than one tenth (their lowest combined total since the 1970s).
The accompanying bar chart illustrates the changing makeup of the U.S. market for PBX systems based on system supplier geographic origin since 1980. When AT&T was still a dominant player in 1980, it was joined by two strong domestic suppliers, GTE and ITT--who would wind up abandoning the market before the end of the decade--plus a few (e.g., Rolm, American Telecom) who would eventually be acquired by foreign competitors, Siemens and Fujitsu, respectively.